Lisbon Among the Most Attractive for  Real Estate Investment

Lisbon Among the Most Attractive for Real Estate Investment

18 February, 2016

Dinheiro Vivo reports "Lisbon Among the Most Attractive for Real Estate Investment"

"Cities like London and Berlin remain the major real estate investment centers, but there are some non-traditional markets that are becoming more popular to investors. This year, Lisbon is the seventh favourite city among European real estate investors according to a study released today by PwC consultants that analyzes trends in the housing market this year. The Portuguese capital has been consistently improving its position and, in 2016, reaches the highest investment prospects since 2006, when the study began.

"Portugal is back on investors’ radars. Portugal regained its credibility," said an industry expert. This gained momentum in 2012, with the reform of the urban lease law. "The changes motivated more residential construction and renovation", although these have been aimed at the luxury market, says the study, titled Emerging Trends Europe. "This will have to change, since we can not build just for millionaires," says one of the investors interviewed.

On the other hand, the market is reinvigorated by the high return that Lisbon offers. "The prime business areas of the city are near the top in Europe, with nearly 5% rates of return," notes PwC. "In less known areas, there is more room to grow and add value," adds the report.

Looking at Portugal in the last quarter of 2014 and 2015, real estate investment amounted to 2 billion euros. Investment funds from countries like China, Malaysia, Singapore, Brazil, Angola, United States, United Kingdom and the Netherlands are increasingly gaining importance at the expense of funds from countries like Germany.

The European real estate industry is "very optimistic" about the prospects for business this year, animated by a macro-economic framework more conducive to business and the improvement in unemployment.

Moreover, with interest rates at historic lows, real estate remains a very attractive investment. "Property offers a return that cannot be found with a similar level of risk in bonds," says the study.

One of the most dynamic sectors identified by the PwC study is logistics which is motivated by the rapid growth of online commerce. Some investors even see logistics as a "substitute" for retail real estate because it is not such an expensive investment.

Residential real estate investment continues to grow, but the focus is changing. "Not long ago, this was just an alternative to commercial real estate. It is now seen as one of the megatrends that affects society, particularly in cities that are growing." "There is a huge shortage of new housing units and the price is beyond the reach of most people. This will keep a lot of people renting or a long time, "says an Irish investor. "The balance between supply and demand means that this is very fertile ground," he adds.

Read original article in Portuguese by Rafaela Burd Relvas here.